David Cameron's refusal to accept increases in the Brussels budget will hit victims of natural disasters and Africa's poorest people because it will lead to delays in EU aid programmes, according to the European Commission President.

José Manuel BarrosoPhoto: REUTERS

By Bruno Waterfield in Brussels

5:54PM GMT 16 Nov 2010

José Manuel Barroso criticised the Prime Minister for blocking a deal on next year's EU budget because MEPs wanted new powers that would allow levels of expenditure to be ratcheted up over the course of next year.

"I regret that a small number of member states were not prepared to negotiate in a European spirit," he said.

"Those that think they have won a victory over 'Brussels' have shot themselves in the foot. They should know that they have dealt a blow to people all over Europe and in the developing world. This is not a budget for 'Brussels'. It is the beneficiaries of EU programmes – citizens, businesses, towns, cities, regions and rural communities – who will feel the impact of this failure."

The European Commission is warning that the failure to get a deal will lead to delays and real term cuts to EU programmes, including those for the world's poorest, because spending will be set at 2010 level until a proper agreement is found early next year.

Britain, Sweden and Netherlands used their vetoes late on Monday night to block a so-called "flexibility instrument" that would have permitted the EU to add an extra £3.4 billion onto spending next year.

Mr Cameron had originally fought for a budget freeze before last month accepting a maximum budget increase of 2.9 per cent in 2011, a rise that would cost British taxpayers an extra £430 million next year at a time of painful domestic spending cuts.

While the European Parliament had dropped its demand for a six per cent increase, MEPs were still asking the backdoor "flexibility" deal that, British officials feared, would have reinstated the extra spending by the back door.

Justine Greening, the economic secretary to the Treasury, accused the parliament of sinking an agreement at 2.9 per cent by demanding additional powers.

"The European Parliament wanted to agree extra powers for future budgets on terms which had no place in a negotiation on the 2011 Budget," she said. We tried to get a deal but, in the end, no deal is better than a bad deal for the UK taxpayer."